Feasibility study of the Baltic Pipeline System get go-ahead

Apr 30, 1999 02:00 AM

Vagit Alekperov, the president of LUKoil, said that the Russian government had given its approval to a feasibility study of the Baltic Pipeline System (BPS).
LUKoil will support the BPS project and hopes to participate in the construction of the vast new network of high-capacity oil pipelines in Northern and North-western Russia, he said. He did not comment on how the construction of new pipelines to the Baltic Sea might affect LUKoil's role as the main exporter or Russian oil to the Baltic States.
Alekperov also did not say whether the company had formally sought a role in the project.

The original agreement on the BPS project was signed in 1996 by Russia's state oil pipeline operator Transneft, two Russian oil companies (Komitek and Rosneft), the Russian-Belarussian company Slavneft and five foreign firms (British Gas, Conoco and Williams of the United States, Neste of Finland and Total of France).
Transneft announced last month that expected work on the BPS project to be underway by the end of 1999. The BPS partners will build a 2,700-km network of pipelines connecting Kharyaga, in the Far North, with new terminal facilities on the Gulf of Finland.
Part of the system is already in place: Transneft has offered up the existing Usa-Ukhta-Yaroslavl-Kirishi pipeline as well as new lines from Kharyaga to Usa and from Kirishi to the Gulf of Finland.
The remaining pipes will be laid in two stages. The partners expect to spend $ 500 million on the first stage, which involves construction of a new pipeline from Kharyaga to Kirishi (via Usinsk, Ukhta and Yaroslavl). This pipeline will be able to carry 12 million metric tons of crude oil per year. A new pipeline will also be constructed from Kirishi to the Gulf of Finland during the first phase. Both pipelines will complement the lines already in place.
The second stage will entail expanding the capacity of the network of pipelines to 30 million metric tons per year. This is expected to cost $ 2 billion. Transneft said in April it expected the BPS partners to begin work this year and complete the first phase by the end of 2000. It did not say when the second phase might be finished.Plans for the BPS were drawn up with the goal of providing a new export route for oil extracted in the Russian Far North, but Transneft has said the network could reach even further. Spokesmen for the oil pipeline operator said earlier this year that BPS pipelines could be used to transport oil from western Siberia and the Ural-Volga region as well as the Timan-Pechora basin. The network could even be connected to other pipes and carry oil from Kazakhstan and other CIS countries, it said.
Transneft did not offer any details on the scope of work required to connect the BPS with other oil-producing regions in Russia and elsewhere. It added that the BPS group planned to use loans from international financial institutions to finance the massive project and would use oil shipped through the pipeline as a guarantee.

Source: NewsBase
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